Indian IT firms to step up acquisitions to boost growth: S&P

Indian IT companies are likely to step up acquisitions to strengthen their competitive position and boost slowing growth, a report by Standard & Poor's Ratings Services said today.PTI | Updated: October 21, 2015, 18:14 IST

NEW DELHI: Indian IT companies are likely to step up acquisitions to strengthen their competitive position and boost slowing growth, a report by CServices said today.

The rating agency said it believes access to new technology, entry into new markets and greater diversification through acquisitions can strengthen the business positions of Indian IT companies.

However, their limited track record in making large acquisitions exposes them to risks in integrating employees and businesses, it added.

The report, 'Moderating Growth And Rising Cash Put Acquisitions On Indian IT Companies' Radar', released today identifies two key drivers for acquisition -- moderating revenue growth and access to new technology and new markets or business segments.

The high cash levels and low debt at Indian IT companies should help them seek opportunities to acquire larger companies than they have in the past, it said.

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After PSU banks, the government is likely to infuse capital in two chronically ill telecom PSUs BSNL and MTNL, and the Union Cabinet is likely to take a decision on 4G spectrum allocation to them by the third week of the current month after DoT places the note before it for consideration.

At a high-level meeting at the PMO late Tuesday, it was also decided that the two telcos will frame a Voluntary Retirement Scheme (VRS) to reduce their employee strength, which will be followed by a reduction in the retirement age to 58.